Swiss life-sciences company Lonza Group has issued a warning about the potential impact on its profitability in the coming years. The company faces the loss of revenue from an agreement with Moderna and the risk of a smaller business with Kodiak Sciences. As a result, Lonza Group expects its profit margin for 2024 to be “in the high twenties” percentage range.
Lonza Group is also reevaluating its core earnings before interest, taxes, depreciation, and amortization margin for 2023. Previously indicated to be in the range of 28% to 29%, the company now anticipates it will be above that range.
In addition to these challenges, Lonza Group foresees that its business growth in 2024 will be offset by a higher comparative base from this year due to the termination of its agreement with Moderna. However, the company does expect sales growth in 2023 to be at the higher end of its previous outlook, which projected mid-to-high single-digit percentage growth at constant currency.
Lonza Group’s financial performance in the third quarter was primarily affected by sustained commercial demand for contract drug manufacturing. However, growth in early-stage services within its biologics segment was hindered by biotechnology funding constraints, leading to slower sales growth in its cell-and-gene operations. Additionally, the company’s capsules and health-ingredients segment experienced weakness in the U.S. nutrition-pharmaceutical market.
Despite these challenges, Lonza Group remains positive about its long-term prospects. It forecasts sales growth of 11% to 13% and a core Ebitda margin of 32% to 34% over the 2024-2028 period.